green bond frameworkgoal to reduce food waste by 50 per cent in its own opera-tions by 2025 is...

GREEN BOND FRAMEWORK

23rd. of January 2019

Green Bond Framework / 23rd. of January 2019

NorgesGruppen ASA | www.norgesgruppen.no | Karenslyst allé 12–14, P.O. Box 300 Skøyen | 0213 Oslo | Tel: +47 24 11 31 00 2

Important noticeThis document (the “Green Bond Framework” or “Framework”) contains information on NorgesGruppen’s (“NorgesGruppen”) and its issuance of interest-bearing notes with added environmental criteria (the “Green Terms”). Any such issuance by NorgesGruppen that includes the Green Terms in its bond documentation, by reference or inclusion, as detailed in this document or in future versions of this document will be labelled a Green Bond (“Green Bond”). Depending on the language of the bond documentation the Green Terms in this Framework may be translated into other languages, as required in the local jurisdiction. Furthermore, all par-ties are advised to review the risk factors in the relevant bond documentation. Any issuance of notes will be subject to the version of the Green Terms in the associated bond documentation. Any new issuance of Green Bonds will include a reference to, or inclusion of, the most recently published Green Terms, which shall be publicly available in the Framework on NorgesGruppen’s website.



Background

Sustainability is good business. In NorgesGruppen, our sustainability work is an integrated part of our busi-ness. We strive to create long-term profitability for the company while adding value for the community. Our ambition is to “be sustainable and to become a climate-neutral business”. This is one of the company’s three main business ambitions, together with “the customer’s first choice” and “competitiveness throughout the value chain”. We wish to break ground and make a difference and we have set ambitious goals within: health and well-being, people, diversity and climate and the environment. Global climate change is one of the biggest social prob-lems of our time and the food and transport sector is an important contributor to a sustainable transition. Today’s customers are more focused on sustainability than in the past. Surveys among young people show that sustainabil-ity is more important than fighting poverty. Our grocery chains reports that they get more questions about use of plastic than about the price of consumer goods. Norges-Gruppen contributes with early adaption of new technol-ogy in order to cut emissions of greenhouse gases and reduce the environmental impact of our operations. We want to be at the forefront of our industry by being a driv-ing force in the development of a climate-neutral society. We ensure this through specific goals.

The main areas in our sustainability work are deeply rooted in our organisation, and status on each of the goals within the main areas is reported to the manage-ment, Board of Directors and owners in the same way as financial numbers.

“Sustainability means that we take social, ethical and environmental considerations and that we are profitable.” This is NorgesGruppen’s definition of sustainability. It is based on the definition by the United Nations, that also lies as the basis for the United Nations’ 17 sustainable development goals from 2015. The sustainable develop-ment goals require broad effort from public authorities, civil society and business. In 2016, we linked our work and our targets to the United Nations’ sustainable devel-opment goals.

NorgesGruppen established its first environmental goals in 2008, and since then has worked systematically with measures within each target area. Over the years, more goals have been added, most recently the goal of reducing use of plastic by 20 per cent within 2025.

We aim to be a leader in eco-friendly transport solu-tions, reduction of food waste and plastic, renewable

The customer’sfirst choice

Competitivenessthroughout

the value chain

Sustainable andclimate-neutral

Main environmental goals towards 2020

– 75% – 25% – 20% – 18% – 15%

100% 100% 85% 11%

Renewable fuels in our distribution

Reduction of released HFC’s

Energy- efficiency

Food waste to animal feed

and biogas pro-duction

Reduction of food waste

Reduction of plastic

(goal by 2025)Waste-

recycling

Renewable energy

Increased capacity vol.



energy production and developments in the field of envi-ronmentally friendly products. We work systematically within each area and hope that most efforts, both large and small, can make a major impact for the community and the climate.

We are working towards a goal of 100 per cent renew-able fuel in our distribution, with the current figure at 60 per cent. For example, we have set up our own fuel stations to make sure that all fuel we use is documented renewable fuel. Biofuel at ASKO has a higher percent-age of bio-produced fuel than the national average and without palm oil being included. We have also opened a production facility for hydrogen in Trondheim, to use in hydrogen vehicles, and we are investing in electric and hydrogen-powered trucks and fork-lifts. We have our own production of renewable energy to make sure that we can become a carbon-neutral business. We produce energy through windmills and solar cells, and we are looking into hydropower.

For many years, NorgesGruppen’s stores, warehouses and industries have been working to become more energy-efficient by reducing emissions, including HFC gases. Through our EKING project (Energy cut in NorgesGrup-pen), 680 of our stores have reduced their energy con-sumption by more than 30 million kWh, equivalent to annual consumption for more than 1,200 houses. New doors and lids on refrigerators and freezers and better heat recovery are examples of measures we are imple-menting in our existing buildings. For new buildings both within retail, industry and wholesale, NorgesGruppen sets high environmental requirements.

Increased use of capacity volume in transportation and in packaging, as well as reduced use of plastic, are impor-tant environmental goals for all business areas in Norges-Gruppen. These areas are closely linked, and we have conducted a systematic review of all packaging of fruits and vegetables to remove plastic packaging where it is not necessary to preserve food quality. These efforts also provide opportunities for us to increase stacking capacity in distribution.

The percentage of food waste that goes to production of biogas is currently at 85 per cent, and by 2020, the goal is that no food waste will be incinerated. NorgesGruppen’s goal to reduce food waste by 50 per cent in its own opera-tions by 2025 is ambitious, but within reach. Between 2015 and 2017, we reduced food waste by 19 per cent, mainly by means of continual optimisation in logistics between our warehouses and stores, price adjustments on products that are about to expire, and donation of food to voluntary organisations and food distribution centres.

We want to make everyday life easier for our customers. We work to have the most attractive range of goods at the lowest possible cost. We make sure that customers save time and money, and that it is easier to make healthy, green choices. This combination has helped NorgesGrup-pen to continually take market share in a challenging market, while at the same time increasing its financial strength. This is what gives us the competitive edge we need to operate effectively, keep prices down – and to work towards a sustainable and climate-neutral business. Sustainable development is all about taking care of the needs of the generation of today, without destroying the opportunities of future generations. We will continue to contribute to a sustainable development – because it is good business.

NorgesGruppen will strive to monitor the development of the Green Bond market to continually advance the Green Terms. As such the Green Bond Framework may be updated from time to time to reflect current market practices. In establishing the terms in this framework NorgesGruppen has sought to comply with the Green Bond Principles (June, 2018) as well as the current best market practice.

NorgesGruppen has worked together with Handelsban-ken to develop the Green Bond Framework. Cicero has provided a second opinion on the Framework, which is publicly available on NorgesGruppen’s website. More information about our work with sustainability is avail-able on our website (norgesgruppen.no/barekraft).

Oslo, 23rd. of January 2019

Mette Lier Runar Hollevik Group CEO Group CFO

Torbjørn Johannson Chairman of the Board ASKO



Methodology and Scope

INVESTMENT CATEGORIESEligible Projects and Assets are green assets identified within NorgesGruppen’s existing assets and ongoing development that support the transition to low carbon intensity and sustainable development. All Eligible Proj-ects and Assets are to contribute to one or more of the following set of global criteria:

1. Mitigation (M): Reduce harmful emissions of green-house gas, either by improving and transitioning exist-ing assets through meaningful upgrades and retrofits,or by investing in new assets utilising low carbon inten-sive technology and environmentally sound solutions.

2. Adaptation (A): Adaptation investments to betterwithstand the effects brought on by climate change,improving the resilience to climate change andexpected changes in the micro-climate and local envi-ronment, for instance, increased rainfall, heightenedrisk of flooding or sea level rise.

3. Environment and eco-systems (E): Support envi-ronmental investments with a positive environmen-tal impact other than the direct mitigation of climatechange (maximum 15 per cent of net proceeds).

EXCLUSIONSThe net proceeds will not be allocated or linked to fossil energy generation, nuclear energy generation, research and/or development within weapons and defence, poten-tially environmentally negative resource extraction (such as rare-earth elements or fossil fuels), gambling or tobacco.

ALLOCATION OF NET PROCEEDSThe net proceeds from NorgesGruppen’s Green Bonds will be used to finance a selected pool of “Eligible Projects and Assets” in accordance with the Green Bond Frame-work. The long-term ambition is to allocate the majority of the net proceeds to new projects and assets (defined as projects and assets financed within 12 months from completion). The proportion of net proceeds allocated to new projects and assets will be disclosed in the annual reporting.



ALIGNMENT WITH THE UN SUSTAINABLE DEVELOPMENT GOALSAgenda 2030 and the Sustainable Development Goals (“SDG”) were adopted by the United Nations General Assembly on 25 September 2015. There are 17 global goals with 169 defined underlying targets, aimed at achieving long-term sustainable economic, social and environmental development in order to eradicate extreme poverty, to reduce inequal-ity and injustice in the world, and to fight climate change.

NorgesGruppen focuses on the following Sustainable Development Goals

This Framework mainly targets the following Sustainable Development Goals

A healthier Norway NorgesGruppen must make it easier to eat healthier, and strengthen public health, among other things by selling more fruit and vegetables, wholegrain products and fish, and reducing salt, sugar and saturated fat in our range, and by offering healthier products. We must offer safer food, and help to make it easier to live healthily, with consumption that is sustainable in the long run.

A sustainable value chain By working with a sustainable value chain we are contributing to protecting labour rights, reducing impacts on the climate, environment and resources, and safeguarding the welfare of land-based and marine animals. We will contribute to more sustainable agriculture, and overall make production and consumption more sustainable.

An ecofriendly Norway NorgesGruppen aims to be a climate-neutral company, and to spearhead the development of ecofriendly products, renewable energy and climate-friendly transport. Climate measures throughout the value chain, with measures to reduce and utilise waste, are important to achieving more sustainable use of resources and consumption.

A diverse norway NorgesGruppen must safeguard the rights, health and safety of our employees, and the manpower inclu-ded in our value chain. Among other things, this means equal pay for equal work, sound integration and a good learning environment. We are now doubling the number of apprentices and occupational training positions up to 2020.

A thriving Norway NorgesGruppen has stores and warehouses all over Norway, and therefore a great impact on workplaces and settlement, especially in rural Norway (“Distrikts-Norge”). Promoting sustainable agriculture, and sup-porting and developing small and medium-sized local food suppliers, are examples of how we contribute to sustaining economic growth across the country.

NorgesGruppen has defined five action areas within sustainability and each of them corresponds to one or more of the UN Sustainable Development Goals. NorgesGruppen works towards a sustainable global footprint – both today and in 2030.



Green Terms

1. USE OF PROCEEDSThe net proceeds from the issuance of Green Bonds will be used by NorgesGruppen to, in whole or in part, finance or refinance investments (“Eligible Green Projects and Assets” or “Green Projects and Assets”) that promote the transition to low-carbon, climate resilient and sustain-able economies, as well as environmental and ecosystem improvements. The net proceeds will be used exclusively to finance or refinance projects and assets that comply with the categories and criteria set out below, as well as the Exclusion and Allocation criteria (see Methodology and Scope).

I. Clean Transportation (M)Financing of transportation vehicles with electric or hydrogen technology as well as supportive infrastructure such as charging stations, hydrogen production facilities and other investments that support and emphasize the use of clean transportation solutions.

II. Green Buildings (M)Financing of development, acquisition, renovation or otherwise completed commercial properties, such as stores and warehouses within NorgesGruppen that have or will receive (i) a design stage certification, (ii) a post-construction certification or (iii) an in-use certification in accordance with BREEAM “Excellent” or “Outstand-ing”. The building will also follow the applicable national building code (TEK17).

III. Renewable Energy (M)Financing of renewable energy production, such as wind power installations, small hydro power plants (<10MW), emissions-free geothermal heating and cooling instal-lations, heat pumps and heat exchangers, on-site solar power installations or stand-alone solar farms, as well as related infrastructure investments for example grid con-nections, electric substations, networks or foundations.

2. PROCESS FOR PROJECT EVALUATIONAND SELECTION

NorgesGruppen’s business units will identify and nomi-nate projects and assets within the eligible categories to a business council consisting of members from the senior management at NorgesGruppen including the CFO and representatives from the sustainability, treasury and business units. The council will evaluate the nomi-nated projects and assets, and ensure compliance with the Green Terms. A consensus decision by the council is required to approve the Eligible Projects and Assets before any allocation of net proceeds. The projects and assets must also be compliant with applicable national laws and regulations, as well as policies and guidelines at NorgesGruppen. Decisions by the council will be docu-mented. To ensure legitimacy in this process a list of all Eligible Projects and Assets that meet the Green Terms will be kept by NorgesGruppen. The list will be used as a tool to determine if there is a current or expected capacity to issue a Green Bond.

The Selection Process of Eligible Green Assets at NorgesGruppen Compliance

with laws and regualtions

Compliance with policies

and guidelines

Compliance with Green

Terms

Pool of Eligible Green Assets

& Projects

Projects and Assets selected for Financing

Transparency via annual reporting

Ineligible Projects and Assets



3. MANAGEMENT OF PROCEEDSThe net proceeds of any issue under the Green Bond Framework will be credited to an earmarked account (the “Green Account”). Deductions will be made from the Green Account by an amount corresponding to the financing or refinancing of Eligible Green Projects and/or Assets that have qualified according to the Pro-cess for Project Evaluation and Selection or to repay a Green Bond. If an Eligible Green Project or Asset no longer qualifies according to the Green Terms or if the underlying Eligible Green Project and Asset is divested, an amount equal to the funds will be re-credited to the Green Account pending reallocation to other Eligible Green Projects and/or Assets. Net proceeds may be real-located to other Eligible Green Projects and Assets by the treasury at any time during the term of a Green Bond. NorgesGruppen’s treasury will keep a record of the pur-pose of any change in the Green Account.

Pending allocation of the net proceeds and while the Green Account has a positive balance, including the unlikely event of there being no Eligible Green Projects and/or Assets, the proceeds may be invested or utilised by treasury in accordance with NorgesGruppen’s finan-cial policy. Such investments are permitted in Norwegian government notes (including related entities), Norwegian municipal notes (including related entities) or commer-cial papers issued by Nordic banks and corporates (with minimum A-flat rating from a reputable rating agency). The allocation of proceeds will be verified by a third party (see “Annual Review” under Reporting and Transpar-ency).

External ReviewNorgesGruppen acknowledges the recommendation in the Green Bond Principles regarding transparency and verification of net proceeds allocation. The allocation of net proceeds will be verified by NorgesGruppen’s external auditor. For further information, see the “Annual Review” section under Reporting and Transparency.

4. REPORTING AND TRANSPARENCYNorgesGruppen will publish an annual report on its web-site (www.norgesgruppen.no) that will detail the alloca-tion of green bond net proceeds and adherence to the Green Terms (the “Reporting”). The first such Reporting is expected to take place in April 2020 and will be available in Norwegian.

The Reporting will contain information on the Eligible Green Projects and Assets and a summary of Norges-Gruppen’s Green Bond activities in the preceding year, as well as information, including examples of the Eligible Green Projects and Asset’s adherence to the relevant cri-teria in the Framework.

Allocation Disclosure• NorgesGruppen will provide allocation reporting for

each of the Use of Proceeds categories in the Frame-work. Emphasis will be placed on providing examplesand allocation reporting to single projects based on size.

• The sum of outstanding Green Bonds.• The sum of the Green Account balance (including

any short term investments or funds managed withinNorgesGruppen’s liquidity portfolio).

• The proportion of net proceeds allocated to new invest-ments (see definition under Methodology and Scope).

• All data is to be as of the end of the previous year.

Performance ReportingThe Reporting will contain a disclosure of asset level per-formance indicators. The reporting will strive to disclose the impact based on the green bond financing’s share of the total investment. For projects and assets that are not yet operational, NorgesGruppen will strive to provide estimates of future performance levels. NorgesGruppen will emphasise energy production/savings and green-house gas savings as the most relevant performance metrics for most project types.

The data will be provided in a table format and disclosing, where and when available, the following indicators and measurements:

Impact Metrics for Clean Transportationi. Annual absolute (gross) greenhouse gas emissions in

CO2e.ii. Annual absolute (gross) greenhouse gas savings in

percentage.iii. The number of financed low carbon vehicles.iv. The number of charging stations for electric vehicles

installed.v. The amount of hydrogen produced (kg).

Impact Metrics for Green Buildingsi. Environmental certification.ii. Energy consumption disclosed by absolute consump-

tion (kWh) and intensity (kWh per square meter) peryear.

iii. Calculated carbon footprint disclosed by absoluteemissions (tons) and intensity (kg per square meter).The greenhouse gas emissions are monitored annu-ally by NorgesGruppen in accordance with the Green-house Gas Protocol per year.

Impact Metrics for Renewable Energyi. Yearly production (GWh).ii. For an installation of renewable energy in a real estate

asset the percent of the assets total energy use sup-plied by the installation will be disclosed.

iii. Prevented CO2e emissions from production (tonnes).



Annual ReviewThe external auditor of NorgesGruppen, or a similar party appointed by NorgesGruppen with the relevant expertise and experience, will investigate and report whether an amount equal to the Green Bond net proceeds have been allocated to the Eligible Green Projects and Assets that NorgesGruppen has communicated in the Reporting. The conclusions will be provided in a signed statement, which will be published on NorgesGruppen’s website (https://www.norgesgruppen.no/finans/gjeldsfinansiering/gronne-obligasjonslan/).

Dedicated WebsiteNorgesGruppen will provide a dedicated webpage for Green Bonds at its website (https://www.norgesgruppen.no/finans/gjeldsfinansiering/gronne-obligasjonslan/) where investors can find information regarding Norges-Gruppen’s Green Bonds, including:

✔ The Green Bond Framework✔ The Second Opinion✔ The Reporting✔ The Annual Review✔ Investor Presentations

https://www.norgesgruppen.no/finans/gjeldsfinansiering/gronne-obligasjonslan/







Definitions

HFC means hydro fluorocarbons.

BREEAM Excellent means the rating Excellent within BREEAM, a grading scheme for the real estate sector developed by BRE Global, as well as local adaptations such as BREEAM-NOR developed by the Norwegian Green Building Councils, pursuant to their definition at the time of receipt of the relevant certification.

TEK means the Norwegian national building regulation set up by Ministry of Local Government and Regional Development, determining the regulatory requirements and offering general advice regarding health, environ-mental, safety and energy at all stages of planning, con-struction and operations of real estate assets.

Policy documents that govern NorgesGruppen’s Environmental

and Sustainability work

Public Policies and Guidelines are available at NorgesGruppen.no

Name Publicly available1 Annual report and Sustainability Report 2017 Link2 Ethical Guideline Link3 Code of Conduct Link4 Financial Policy Non-public5 Sustainability Policy Non-public6 Purchase Policy Non-public

NorgesGruppen ASA | www.norgesgruppen.no | Karenslyst allé 12–14, Postboks 300 Skøyen | Tel: +47 24 11 31 00

GREEN BOND FRAMEWORK / 31 OCTORBER, 2018 / 11

https://www.norgesgruppen.no

https://www.norgesgruppen.no/globalassets/finansiell-informasjon/ng_annual-sustainability-report_2017_web.pdf

https://www.norgesgruppen.no/finans/etiske-retningslinjer/

https://www.norgesgruppen.no/globalassets/dette-er-norgesgruppen/code-of-conduct-eng.pdf

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www.norgesgruppen.no

NorgesGruppen has 1,835 grocery stores across Norway. These stores offer food and beverage products

from the full range of major international suppliers, as well as local Norwegian suppliers. We have just below

28,000 employees in activities owned by NorgesGruppen and almost 40,000 employees in total when retailer-

owned stores are included. Read more at norgesgruppen.no.

Would you like to learn more about how we manage sustainability? See norgesgruppen.no

Our vision is to

provide you with a

better everyday life.

green bond frameworkgoal to reduce food waste by 50 per cent in its own opera-tions by 2025 is...

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